Proposed Changing of the Guard at CFPB

If there’s one thing that the House of Representatives has assured us of over the last week, it’s that the GOP really wants to rein in the Consumer Finance Protection Bureau (CFPB). Last week, Republican Congressman Randy Neugebauer introduced a bill (H.R. 1266) that would replace the CFPB’s director with a five-member commission. Since then, republican Congressman Sean Duffy has since introduced four other CFPB reform bills.

Congressman Neugebauer’s attempt to replace the CFPB director with a commission is being portrayed as an attempt to increase transparency and accountability at the Bureau, and it’s not the first attempt. A similar attempt was made last year and approved by the House, but it did not ultimately reach a vote in the Senate. 

Not only would this latest bill replace the director position with a commission, but it would also change the name of the bureau to the “Financial Product Safety Commission.” The committee’s chair would be appointed by the President, but the terms of commission members would be limited to 5 years and no more than 3 members could belong to the same political party.  A number of commercial and financial trade groups have expressed support for this bill, including the U.S. Chamber of Commerce and a number of financial associations, banks, and credit unions.

Representative Duffy’s more recent four bills propose the following:

  1. Make CFPB subject to the congressional appropriations process.
  2. Require CFPB to notify and receive permission from consumers in order to collect non-public information about them. This also extends to contractors employed/utilized by CFPB.
  3. Allow the Financial Stability Oversight Council to remove a CFPB regulation with a majority vote as opposed to a super majority (two-thirds) vote.
  4. Switch CFPB salaries to be in line with government pay scale rather than Federal Reserve Board’s higher pay scale.

The plus side of having a sole director in charge of the CFPB is that such leadership enables the director to set policy and keep the department functioning without bogging down the process. What both major political parties have to fear is when the President is of the other party and appoints a Director who will further that party’s agenda.  Having a bipartisan commission, on the other hand, would minimize rapid shifts in direction at the cost seen in other bipartisan boards appointed by the President; Congress can hold up these appointments, keeping the boards from having a quorum and, by default, shutting down the department.

Regardless of what side of the aisle anyone is on in regards to these bills, it is important to note that each would have to get through both the House of Representatives and the Senate and then have the President sign them. These same ideas have been in circulation since the founding of the CFPB, and any changes to the Bureau are likely to be vetoed if approved by both houses, which has yet to happen.


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